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Tuesday, September 28, 2010

Why technology is so expensive in Israel

The JPost asks why iPhones are so expensive here.
Often viewed as a high-tech hub, when is comes to consumer electronics Israeli tech analysts say pricing goes through the roof.

According to a survey by Israel’s business daily The Marker the price of an unlocked 16 gigabyte iPhone 4 in Israel will set you back $1,084, compared to $790 for the same model in the United Kingdom and $751 in Canada. It is not possible to buy an unlocked iPhone in the United States.

Israel is also expensive when it comes to data pricing. A one gigabyte data package with Israeli mobile operator Cellcom costs $21 compared to a two gigabyte option for $25 with American operator AT&T.

“The consumer market in Israel is really small and the profit margin for companies is really small,” Gal Mor an Israeli Technology blogger at holesinthenet.co.il, told The Media Line. “Its not like in the United States with tens of millions of early adapters and then 150 million consumers, where you can afford to sell consumer electronics at a reasonable price and still make a profit.”


David Shamah, a tech blogger and technology reporter for the Jerusalem Post, said that the high price of Apple products in Israel is a function of the market dominance of one company, iDigital, which has a monopoly over the distribution of Apple products in Israel.
There may be another reason.

You may recall the iPad fiasco last spring. It's connected.

Recently, the screen on my laptop broke and I had to have it replaced (cost about NIS 900 - about $243 at today's exchange rate.

That's enough that it would almost be worth buying a new laptop in the US (where you can get them for $300). In Israel, the price of a desktop is close to the US price plus 16% VAT, but the price of laptops is much higher. I fixed the screen.

According to the repair person, the disparity in the price of laptops is because the Ministry of Communications takes a licensing fee (something on the order of $200) for every laptop sold in Israel. You don't pay that fee if you bring one in.

That kind of fee may be a factor in the iPhone pricing as well (recall who was behind the iPad fiasco and why).

So while I may buy my next desktop here (I bought the last one in the US), I will continue to buy laptops in the US.


At 11:32 AM, Blogger NormanF said...

Its a good idea, Carl.

Pick up a netbook too, while you're at it.

They're great for use in Internet Cafes and on the road.


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